Pennsylvania § 8415 - Contents of partnership agreement.

§ 8415. Contents of partnership agreement.

(a) Scope of partnership agreement.--Except as provided in subsections (c) and (d), the partnership agreement governs:

(1) relations among the partners as partners and between the partners and the partnership;

(2) the rights and duties under this title of a person in the capacity of a partner;

(3) the business of the partnership and the conduct of that business;

(4) the means and conditions for amending the partnership agreement; and

(5) the means and conditions for approving a transaction under Chapter 3 (relating to entity transactions).

(b) Title applies generally.--To the extent the partnership agreement does not provide for a matter described in subsection (a), this title governs the matter.

(c) Limitations.--A partnership agreement may not do any of the following:

(1) Vary a provision of Chapter 1 (relating to general provisions) or Subchapter A of Chapter 2 (relating to names).

(2) Vary the right of a partner to approve a merger, interest exchange, conversion or division under section 333(a)(2) (relating to approval of merger), 343(a)(2) (relating to approval of interest exchange), 353(a)(3) (relating to approval of conversion) or 363(a)(2) (relating to approval of division).

(3) Vary the required contents of a plan of merger under section 332(a) (relating to plan of merger), plan of interest exchange under section 342(a) (relating to plan of interest exchange), plan of conversion under section 352(a) (relating to plan of conversion), plan of division under section 362(a) (relating to plan of division) or plan of domestication under section 372(a) (relating to plan of domestication).

(4) Vary a provision of Chapter 81 (relating to general provisions) or 82 (relating to limited liability partnerships and limited liability limited partnerships), except as provided in subsection (d).

(5) Vary the provisions of section 8411(b), (c) and (d) (relating to short title and application of chapter).

(6) Vary the law applicable under section 8414(a)(1) (relating to governing law).

(7) Vary any requirement, procedure or other provision of this title pertaining to:

(i) registered offices; or

(ii) the department, including provisions pertaining to documents authorized or required to be delivered to the department for filing under this title.

(8) Vary the provisions of section 8437 (relating to actions by and against partnership and partners).

(9) Unreasonably restrict the duties and rights under section 8446 (relating to rights to information), except as provided in subsection (d).

(10) Eliminate the duty of loyalty provided for under section 8447(b)(1)(i) or (ii) or (2) (relating to standards of conduct for partners) or the duty of care, except as provided in subsection (d).

(11) Vary the contractual obligation of good faith and fair dealing under section 8447(d), except as provided under subsection (d).

(12) Unreasonably restrict the right of a person to maintain an action under section 8448(b) (relating to actions by partnership and partners).

(13) Provide indemnification or exoneration in violation of the limitations in sections 8441(m) (relating to partner's rights and duties) and 8447(i).

(14) Vary the power of a person to dissociate as a partner under section 8462(a) (relating to power to dissociate as partner and wrongful dissociation), except to require that the notice under section 8461(1) (relating to events causing dissociation) be in record form.

(15) Vary the causes of dissolution specified in section 8481(a)(4) or (5) (relating to events causing dissolution).

(16) Vary the requirement to wind up the partnership's business as specified in section 8482(a), (b)(1) and (d) (relating to winding up and filing of certificates).

(17) Except as provided in section 8417(b) (relating to amendment and effect of partnership agreement), restrict the rights under this title of a person other than a partner.

(d) Permitted terms.--Subject to subsection (c)(13), the following rules apply:

(1) The partnership agreement may:

(i) specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts;

(ii) alter the prohibition in section 8231(a)(2) (relating to limitations on distributions by limited liability partnership) so that the prohibition requires only that the partnership's total assets not be less than the sum of its total liabilities; and

(iii) impose reasonable restrictions on the availability and use of information obtained under section 8446 and may define appropriate remedies, including liquidated damages, for a breach of any reasonable restriction on use.

(2) To the extent the partnership agreement expressly relieves a partner of a responsibility that the partner would otherwise have under this title and imposes the responsibility on one or more other partners, the agreement also may eliminate or limit any fiduciary duty of the partner relieved of the responsibility which would have pertained to the responsibility.

(3) If not manifestly unreasonable, the partnership agreement may:

(i) alter the aspects of the duty of loyalty stated in section 8447(b)(1)(i) or (ii) or (2);

(ii) prescribe the standards by which the performance of the contractual obligation of good faith and fair dealing under section 8447(d) is to be measured;

(iii) identify specific types or categories of activities that do not violate the duty of loyalty;

(iv) alter the duty of care; and

(v) alter or eliminate any other fiduciary duty.

(e) Determination of manifest unreasonableness.--The court shall decide as a matter of law whether a term of a partnership agreement is manifestly unreasonable under subsection (d)(3). The court:

(1) shall make its determination as of the time the challenged term became part of the partnership agreement and by considering only circumstances existing at that time; and

(2) may invalidate the term only if, in light of the purposes and business of the partnership, it is readily apparent that:

(i) the objective of the term is unreasonable; or

(ii) the term is an unreasonable means to achieve the term's objective.

(July 15, 2024, P.L.728, No.59, eff. 60 days)

2024 Amendment. Act 59 amended subsec. (c)(2).

Cross References. Section 8415 is referred to in sections 8231, 8411, 8412, 8414, 8417, 8437, 8446, 8447, 8448, 8462, 8481, 8482 of this title.